Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q4 2014 Earnings Presentation
29 slides from Ally Financial's earnings presentation, Jan 29, 2015
Slide 1: Ally Financial Inc. 4Q Earnings Review
Ally Financial Inc. 4Q Earnings Review January 29, 2015 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com
Slide 2: Forward-Looking Statements and Additional Information
Forward-Looking Statements and Additional Information The following should be read in conjunction with the financial statements, notes and other information contained in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. This information is pr
Slide 3: 2014 Highlights
2014 Highlights Significantly improved shareholder returns in 2014 – Core pre-tax income ex. repositioning items(1) of $1.6 billion vs. $850 million in 2013 – Core ROTCE(2) of 7.9% vs. 3.1% in 2013 Continue to target 9-11% run-rate Core ROTCE by year-end 2015 – Adjusted EPS(3) of $1.68 vs. $(0.14) i
Slide 4: Competitive Evolution
Competitive Evolution • In 2009, Ally embarked on a multi-year process to transition itself from a captive to a full line, dealer- centric, diversified auto financial services company – Expected manufacturer incentive business to decline as exclusive contracts stepped down and captives expanded prod
Slide 5: Successful Transformation of Business
Successful Transformation of Business Decisioned Apps and Dealer Relationships Used Originations (Decisioned applications in millions) ($ billions) 16,823 16,034 15,732 $11.7 14,307 9.1 13,694 7.8 $9.6 $9.9 6.7 $9.0 5.6 3.7 $4.7 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Decisioned Applicatio
Slide 6: Impact of GM Decision to Internalize Leasing
Impact of GM Decision to Internalize Leasing • GM announced certain leases to be done exclusively through GM Subvented Products ($B) GM Financial 2014 Ally – Results in lower residual value exposure as lease portfolio Product Originations declines GMC/Buick/Cadillac Lease $5.2 Chevrolet Lease 4.1 –
Slide 7: 2014 Progress on Path to Double-Digit Core ROTCE
2014 Progress on Path to Double-Digit Core ROTCE 2013 Core 3.1% ROTCE(1) • Net financing revenue(2) up 17% YoY NIM Expansion ~330 bps • Full-year cost of funds(2) down 50bps YoY • Total expenses down $0.5 billion and Expense controllable down $0.2 billion vs. FY13 Rationalization ~240 bps • Adjusted
Slide 8: Financial Metrics
Financial Metrics Core Pre-tax Income (ex repositioning)(1) Cost of Funds(2) ($ million) $1,619 3.1% 2.9% 2.5% $1,070 2.0% $792 $850 2011 2012 2013 2014 2011 2012 2013 2014 (1) Represents a non-GAAP financial measure. As presented excludes OID amortization (2) Excludes OID expense, income tax expens
Slide 9: Fourth Quarter and Full Year Financial Results
Fourth Quarter and Full Year Financial Results ($ millions except per share data) 4Q 14 3Q 14 4Q 13 FY 2014 FY 2013 (1) Net financing revenue $ 835 $ 936 $ 841 $ 3,547 $ 3,028 (1) Total other revenue 370 375 324 1,438 1,605 Provision for loan losses 155 102 140 457 501 Total noninterest expense 653
Slide 10: Results by Segment
Results by Segment • Auto Finance results higher YoY driven by asset growth and CFPB charge in 2013, partially offset by lower net lease revenue – QoQ decline driven by lower net lease revenue and seasonally higher provision expense • Insurance favorability driven primarily by lower expenses YoY and
Slide 11: Net Interest Margin
Net Interest Margin • Net Interest Margin(1) down 4 bps YoY and 30 bps QoQ – Full-year 2014 NIM of 2.54% up 33 bps vs. 2013 – 4Q cost of funds(1) down 31 bps YoY and relatively flat QoQ Reduction of legacy high-cost debt and continued deposit growth – Earning asset yields down primarily as a result
Slide 12: Ally Bank Deposit Franchise
Ally Bank Deposit Franchise • Continued franchise momentum with $48 billion of Stable, consistent growth of retail deposits retail deposits Ally Bank Deposit Levels • $1.2 billion of retail deposit growth QoQ, and $4.8 ($ billions) $57.8 billion YoY $52.8 $54.9 $55.6 $56.4 $9.7 $9.9 $9.7 $9.7 $9.7 –
Slide 13: Capital
Capital • Tier 1 Common capital relatively flat in the quarter as net income available to common was offset by seasonal risk-weighted asset growth in the commercial auto portfolio • Tier 1 Common ratio of 9.6%, up 80 bps YoY and down 5 bps QoQ – 4Q14 Tier 1 Common ratio of 10.2% pro forma for China
Slide 14: Asset Quality
Asset Quality Consolidated Net Charge-Offs U.S. Commercial Auto Net Charge-Offs 0.68% 344% 0.60% 0.53% 0.53% 0.53% 0.03% 238% 234% 0.34% 224% 187% 0.00% 0.01% 144% 0.00% 0.00% 0.00% $2 $0 $0 $1 $0 ($0) 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 ALLL as % of Annualized NCOs Annualized NCO Rate 3Q 13 4Q 13 1
Slide 15: Auto Finance – Results
Auto Finance – Results • Auto Finance reported pre-tax income of $310 Increase/(Decrease) vs. million in 4Q, up $103 million YoY and down $105 Key Financials ($ millions) 4Q 14 3Q 14 4Q 13 million from the prior quarter Net financing revenue $ 767 $ (83) $ (42) Total other revenue 69 - 8 – Net finan
Slide 16: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $11.8 $10.9 $9.6 20% 29% 27% 30% $9.2 20% $9.0 16% $8.2 19% 16% 22% 18% 17% 26% 15% 28% 27% 15% 16% 18% 7% 8% 8% 63% 63% 24% 69% 66% 27% 66% 60% 30% 10% 15% 5% 3Q 13 4Q 13 1Q 14 2
Slide 17: Insurance
Insurance • Pre-tax income of $86 million, up $20 million YoY Increase/(Decrease) vs. and up $26 million from the prior quarter Key Financials ($ millions) 4Q 14 3Q 14 4Q 13 Insurance premiums, service revenue earned and other $ 245 $ (5) $ (2) – YoY improvement driven partially by lower losses Insu
Slide 18: Mortgage and Corporate and Other
Mortgage and Corporate and Other Mortgage Results Corporate and Other Results Increase/(Decrease) vs. Increase/(Decrease) vs. Key Financials ($ millions) 4Q14 3Q14 4Q13 Key Financials ($ millions) 4Q 14 3Q 14 4Q 13 Net financing revenue (ex. OID) $ 51 $ (10) $ 46 Net financing revenue $ 8 $ (1) $ (6
Slide 19: Conclusion
Conclusion • Strong operating performance – Solid financial performance in auto as growth channel traction accelerated in 2014 – Stable retail deposit growth with balances up 11% YoY • Focused on achieving financial targets by year-end 2015 – 9-11% Core ROTCE – Mid 40% Adjusted Efficiency Ratio • TA
Slide 20: Supplemental Charts
Supplemental Charts
Slide 21: Fourth Quarter and Full Year Financial Results
Supplemental Fourth Quarter and Full Year Financial Results ($ millions) 4Q 14 3Q 14 4Q 13 FY 2014 FY 2013 (1) Net financing revenue $ 835 $ 936 $ 841 $ 3,547 $ 3,028 (1) Total other revenue 370 375 324 1,438 1,605 Provision for loan losses 155 102 140 457 501 Controllable expenses (2) 478 469 506 1
Slide 22: Funding
Supplemental Funding • Diversified funding strategy with opportunities to lower cost of funds Total Asset Breakdown – 69% of total assets reside at Ally Bank ($ billions) – Deposits now represent 44% of Ally’s funding $151.2 $148.5 $149.9 $149.2 $151.8 • Efficient capital markets funding in 2014 – C
Slide 23: Expenses
Supplemental Expenses • Controllable expenses down $29 million in 4Q YoY • Other noninterest expense down YoY driven partially by CFPB / DOJ charge – QoQ driven partially by seasonally lower weather-related insurance losses Increase/(Decrease) vs. ($ millions) 4Q 14 3Q 14 4Q 13 3Q 14 4Q 13 Compensat
Slide 24: Liquidity
Supplemental Liquidity • Consolidated available liquidity of $16.6 billion – $8.8 billion at the parent and $7.8 billion at Ally Bank Available Liquidity 12/31/2014 9/30/2014 12/31/2013 ($ b illions) Parent(1) Ally Bank Parent(1) Ally Bank Parent(1) Ally Bank (2) Cash and Cash Equivalents $ 2.7 $ 2.
Slide 25: Discontinued Operations
Supplemental Discontinued Operations • Closed China joint-venture sale in January 2015, generating a gain of approximately $0.4 billion Impact of Discontinued Operations Increase/(Decrease) vs. ($ millions) 4Q 14 3Q 14 4Q 13 Auto Finance $ 23 $ (6) $ 172 Insurance 0 (6) (0) Corporate and Other 6 (10
Slide 26: Deferred Tax Asset
Supplemental Deferred Tax Asset • DTA utilization resulted in approximately $8 million of cash taxes paid in 2014 Deferred Tax Asset 4Q14 3Q14 (1) ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 1,001 $ - $ 1,001 $ 7
Slide 27: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures $ in millions 4Q 14 3Q 14 4Q 13 OID & OID & OID & GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) Items Items Items Consolidated Ally Net financing revenue $ 799 $ 36 $ 835 $ 889 $ 47 $ 936 $
Slide 28: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures $ in millions FY 14 FY 13 OID & OID & GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) Items Items Consolidated Ally Net financing revenue $ 3,375 $ 172 $ 3,547 $ 2,779 $ 249 $ 3,028 Total other revenue 1,276 162 1,438 1,484
Slide 29: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures 1) Core pre-tax income (loss) is a non-GAAP financial measure. It is defined as income (loss) from continuing operations before income tax expense and primarily bond exchange original issue discount ("OID") amortization expense. 2) Repositi